Sports Stadium Subsidies

In the early days of professional sports, nearly all new sports facilities were privately financed. In recent years, the trend in stadium financing has begun to move towards taxpayer subsidies for new stadium construction or renovation and today nearly all new sports facilities were built with government subsidies.

The Issue

According to Pacific Standard Magazine, over the pst two decades, 101 new sports facilities have opened in the United States (which amounts to a 90-percent replacement rate), and nearly all the projects received direct public funding.

The increase in the number taxpayer subsidized stadiums came about for several reasons. Sports teams have become a strong source of civic pride for cities, with city leaders using their cities' strong sports culture as a means to market a city to new businesses. In the last few decades professional sports teams have also gained a great deal of bargaining power with relocation becoming more easily accomplished where it was once expensive and risky. Cities are now competing for new and relocating franchises, enticing teams with tax breaks and stadium funding.

Supporters of taxpayer funded stadiums have long claimed that the new facilities act as engines of new economic development, but several economic studies have found their influence to be limited. Samuel Staley and Leonard Gilroy noted in a Reason Public Policy Institute piece that the majority of research done on the economic effects of stadium construction found no link between the new facilities and job or income growth. Critics also challenge the notion that stadiums create new consumer spending; any new spending dollars generated by a stadium are simply shifted from other spending, ultimately ending up in the team owner’s pocket and not the local economy.

Our Stance

Stadium subsidies are a poor use of taxpayer dollars. They rarely realize the benefits their supporters claim and shift tax revenue away from where it is better utilized. Cities seeking to improve their competitiveness would be better served reducing their taxes or investing in more cost effective improvements like new and improved infrastructure.